Prior Dan Pilla Featured Article

THE PRESIDENT’S EXECUTIVE ORDER REGARDING THE ACAWhat the Order Does and Does Not DoPart of April 2017 Pillla Talks Taxes Special Report

On January 20, 2017, the day he took the oath of office as the President of the United States, Mr. Trump issued an Executive Order regarding the enforcement of the Affordable Care Act (ACA). Since the penalties under the ACA have come into full bloom over the past two years, there are many questions about what will happen to the penalties under President Trump’s Executive Order (EO).

The purpose of the EO is to send the message to all agencies of the federal government that the goal of Trump’s administration is to repeal the ACA. However, as we now know from the American Health Care Act introduced in Congress in early March (see the article below entitled “THE AMERICAN HEALTH CARE ACT: The Bill to Repeal and Replace the Affordable Care Act”), a full repeal of the ACA is not in the cards.

In the meantime, the EO asks government agencies to “minimize the unwarranted economic and regulatory burdens of the Act.” The order asks agency heads to use their “authority and discretion” to “waive, defer, grant exemptions from, or delay the implementation of” any provision of the act that might cause fiscal or regulatory hardship on a State, a family, a taxpayer, a medical device manufacturer, a health care provider or an insurance company.

In light of this EO, many have asked whether the IRS will stop assessing and collecting the Shared Responsibility Payment (SRP, the penalty applicable when a person or family does not have federally mandated minimum essential health insurance coverage), or stop collecting the additional tax assessment attributable to the Advanced Premium Tax Credit (APTC) overpayment. See the lead article for a detailed discussion on these two potential liabilities.

It is clear to me that the purpose of the EO is largely symbolic. I believe the president was giving what teeth he could to his campaign promise that on day one, he was going to address a law that by all accounts, is doing far more harm than good to the idea of affordable health care in America. Of course, only Congress can repeal a law. The president has no unilateral authority to do so. That’s what makes the EO merely symbolic.

Given that both the SRP and the APTC are statutory provisions of the ACA, I don’t believe that the chief executive has the legal authority to simply stop applying the law. As we learned from the above article, the enforcement and administration of these provisions are already deeply engrained in IRS procedures. Therefore, it’s not as if the IRS will simply hold off in developing enforcement procedures in order to see what happens. That ship has already sailed.

The EO states that the heads of administrative agencies “shall exercise all authority and discretion available to them” to withhold enforcement actions. However, the Commissioner of the IRS has no independent authority or discretion to choose which provisions of the tax code to enforce and which to not enforce. As I state in the above article, we are talking about statutory provisions of the code that carry the full force of law as opposed to agency regulations, which the president can personally put a stop to.

Based on this, I fully expect the IRS to continue to assess and collect both the SRP and the APTC for 2016 tax returns, due to be filed in 2017. Not until we have an actual congressional repeal of these provisions of law can taxpayers expect any real relief. And while a bill has been introduced in Congress to do just that it will be some time in the legislative process before anything comes out the other end that Trump will sign.

In the meantime, for your reading pleasure, what follows below is the full text of the president’s January 20, 2017, Executive Order.

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act (Public Law 111-148), as amended (the "Act"). In the meantime, pending such repeal, it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.

Sec. 2. To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.

Sec. 3. To the maximum extent permitted by law, the Secretary and the heads of all other executive departments and agencies with authorities and responsibilities under the Act, shall exercise all authority and discretion available to them to provide greater flexibility to States and cooperate with them in implementing healthcare programs.

Sec. 4. To the maximum extent permitted by law, the head of each department or agency with responsibilities relating to healthcare or health insurance shall encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.

Sec. 5. To the extent that carrying out the directives in this order would require revision of regulations issued through notice-and-comment rulemaking, the heads of agencies shall comply with the Administrative Procedure Act and other applicable statutes in considering or promulgating such regulatory revisions.

Sec. 6. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

DONALD J. TRUMP

THE WHITE HOUSE

January 20, 2017

Article taken from April 2017 Special Report issue of "Pilla Talks Taxes."